And among all of them, IDO is the name that is circulating around in the crypto industry.
Let's start with the full form of IDO.
IDO stands for initial DEX offering, and what is DEX? well DEX stands for decentralized exchange, so the full form of IDO stands for initial decentralized exchange offering.
But before jumping into the IDOs and their work, let's take a detour and find out why do we need IDO and its predecessor, ICO.
well, to be honest, I have explained ICO in one of my previous blogs, What is an ICO?.
In that blog, I have cleared all the doubts about ICO in detail, but here in this blog, let’s understand it in short.
shall we begin,
Let say you wanted to open a business, then what do you need? funds. right!
And the most common and widely used option to raise funds is, to seek financial loans or investments from banks.
Just like that, in the crypto industry, to raise funds for their projects, many blockchain companies create their crypto tokens and release them to the masses in exchange for some other famous tokens like bitcoin, Ethereum, fantom, and many more.
This process is called fundraising.
One such method to raise funds is called ICO, which was used in 2017.
ICO or initial coin offering is an approach to raise funds from investors through a crowdfunding mechanism.
In 2017 it has generated a lot of hype into the crypto industry. Literally, it has turned many early investors into overnight millionaires.
but, the primary issues with ICOs were the absence of two things,
Absence of supervision and control and
Absence of venture capitalist protections.
The thing is, project teams who were conducting ICOs were not taking enough care of the money invested in it because there were no control mechanisms in place.
At that time almost every ICO project promised huge profits to the investors, out of the many projects turned out to be an easy cash grab but some of them turned out scams, which has discouraged many new investors to invest.
And to solve that problem, a new DeFi approach came into light, IDO.
What is an IDO?
IDO or initial DEX offering is a method or a way to raise funds for a blockchain project, and it enables the user to buy tokens directly from the decentralized exchanges or DEX.
But how it different from ICO, the key difference is that the token which is sold in an IDO is hosted on DEX or decentralized exchange, whereas in ICO, issuers managed all the responsibility.
Benefits of IDO
The first and most important benefit is open and fair fundraising. Previously private investors bought a large part of tokens as fast as they go public and then they will resale to the masses for a very large price,
Second is fast trading and
The third is, tokens in the DEX got immediate liquidity in the market.
How to launch an IDO?
You can start with a business strategy in which you can design a product that can fill the gaps in the crypto industries discuss fund allocations and general marketing strategies,
Then create a whitepaper and websites which will help you to promote your product among investors,
Then visit a DEX launchpad to perform IDO, and voila!! launch your token to start raising the fund immediately.
Now I am sure you have known some basics of IDO, in the next blog I will be going to explain to you how you can take part in the IDO processes.